Correlation Between Wingstop and Churchill Downs
Can any of the company-specific risk be diversified away by investing in both Wingstop and Churchill Downs at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Wingstop and Churchill Downs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Churchill Downs Incorporated, you can compare the effects of market volatilities on Wingstop and Churchill Downs and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wingstop with a short position of Churchill Downs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Churchill Downs.
Diversification Opportunities for Wingstop and Churchill Downs
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wingstop and Churchill is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Churchill Downs Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs and Wingstop is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wingstop are associated (or correlated) with Churchill Downs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Downs has no effect on the direction of Wingstop i.e., Wingstop and Churchill Downs go up and down completely randomly.
Pair Corralation between Wingstop and Churchill Downs
Given the investment horizon of 90 days Wingstop is expected to under-perform the Churchill Downs. In addition to that, Wingstop is 2.38 times more volatile than Churchill Downs Incorporated. It trades about -0.04 of its total potential returns per unit of risk. Churchill Downs Incorporated is currently generating about 0.13 per unit of volatility. If you would invest 13,413 in Churchill Downs Incorporated on August 24, 2024 and sell it today you would earn a total of 818.00 from holding Churchill Downs Incorporated or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wingstop vs. Churchill Downs Incorporated
Performance |
| Timeline |
| Wingstop |
| Churchill Downs |
Wingstop and Churchill Downs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Churchill Downs
The main advantage of trading using opposite Wingstop and Churchill Downs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Churchill Downs can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Churchill Downs will offset losses from the drop in Churchill Downs' long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
| Churchill Downs vs. Accel Entertainment | Churchill Downs vs. PlayAGS | Churchill Downs vs. International Game Technology | Churchill Downs vs. Everi Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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